Stirling Harbour Services Pty Ltd v Bunbury Port Authority

[2000] FCA 38 (French J)
[2000] FCA 1381 (Burchett, Carr, Hely JJ)

Facts

Tow boat BPA advertised for submission of tenders for an exclusive licence to provide towage services in Port Bunbury.

SHS and Adsteam Marine Ltd sought a declaration that the proposed tender would involve a contravention of ss 45, 46 and 47 of the TPA.

Keywords (from appeal case)

TRADE PRACTICES - natural monopoly - exclusive licence arrangement for provision of towage services in the Port of Bunbury - whether entry into the licence agreement with the successful tenderer has the purpose, or is likely to have the effect, of substantially lessening competition - primary judge correctly applied the test of whether, on consideration of the likely state of future competition in the market `with and without' the impugned conduct, the conduct has a proscribed anti-competitive purpose or effect

TRADE PRACTICES - contestable market theory - whether, in a natural monopoly market, there exist competitive forces that derive from credible threats of entry, rather than from the number of actual contestants - primary judge's finding that the market was, at most, only weakly contestable was supported by the evidence - primary judge correctly took account of factors which operated as disincentives to entry, in determining the extent of contestability -there was no error in the primary judge's finding that the threat to the applicant of entry by competitors, was insufficiently credible to exert an effective control over its prices - the fact that details of the agreement were to be negotiated with the preferred tenderer, did not detract from the price and level of service which resulted from the competitive tender process - there was no evidence that a particular less restrictive proposal was likely to have been adopted by the respondent, were it not for the calling of tenders for the exclusive licence - primary judge was correct in concluding that the respondent was exercising regulatory, not market power

Trial (Justice French)

Application rejected

Appeal (Justices Burchett and Hely)

Appeal rejected

In relation to an assessment of likely anticompetitive effect when evaluating conduct that has not yet occurred, their Honours made the following remarks:

[para 12] '... in determining whether the proposed conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition in the relevant market, the Court has to:

consider the likely state of future competition in the market ‘with and without’ the impugned conduct; and
on the basis of such consideration, conclude whether the conduct has the proscribed anti-competitive purpose or effect
…

The test is not a ‘before and after’ test, although, as a matter of fact, the existing state of competition in the market may throw some light on the likely future of competition in the market absent the impugned conduct.'